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BHP to supply nickel to Tesla; focus on supply chain sustainability

BHP will supply Tesla Inc. with nickel from BHP’s Nickel West asset in Western Australia; BHP says that Nickel West is one of the most sustainable and lowest carbon emission nickel producers in the world. Nickel is a key metal used in Tesla’s battery technology.

Demand for nickel in batteries is estimated to grow by over 500 per cent over the next decade, in large part to support the world’s rising demand for electric vehicles. We are delighted to sign this agreement with Tesla Inc., and to collaborate with them on ways to make the battery supply chain more sustainable through our shared focus on technology and innovation.

—BHP Chief Commercial Officer, Vandita Pant

Benchmark estimates that the contract is worth up to 18,000 tonnes of nickel per year starting in 2022. It adds to two more nickel supply deals that Tesla has likely secured to lock up its expected demand from 2022 onwards with Prony Resources and Vale.

Benchmark estimates that as of 2022 onwards 50% of Tesla’s lithium ion battery chemistry will be high nickel cathode (NCM and NCA). The other half will be LFP based chemistry, primarily focused around cell and vehicle production in China with cell partner Contemporary Amperex Technology Ltd (CATL).

Benchmark forecasting that nickel demand from the battery sector will surge to 1.7 million tonnes by the end of the decade, with the battery supply chain representing 35% of total demand, up from a little over 5% today.85% of BHP’s nickel is now sold to global battery material suppliers.

In addition to the supply agreement, BHP and Tesla will collaborate on ways to make the battery supply chain more sustainable, with a focus on end-to-end raw material traceability using blockchain; technical exchange for battery raw materials production; and promotion of the importance of sustainability in the resources sector, including identifying partners who are most aligned with BHP and Tesla Inc.’s principles and battery value chains.

BHP will also collaborate with Tesla on energy storage solutions to identify opportunities to lower carbon emissions in their respective operations through increased use of renewable energy paired with battery storage.

Nickel West is a fully integrated mine-to-market nickel business. All nickel operations (open-cut and underground mines, concentrators, a smelter and refinery) are located in Western Australia.

Low-grade disseminated sulfide ore is mined from Mt Keith, a large open-pit operation and high-grade nickel sulfide ore is mined at Cliffs and Leinster underground mines. The ore is processed through two large concentrators and dryers at Mt Keith and Leinster. Nickel West’s concentrator plant in Kambalda processes ore and concentrate purchased from third parties.

The three streams of nickel concentrate come together at the Nickel West Kalgoorlie smelter. The smelter uses a flash furnace to smelt concentrate to produce nickel matte. Nickel West Kwinana then refines granulated nickel matte from the Kalgoorlie smelter into premium-grade nickel powder and briquettes containing 99.8% nickel. Nickel metal is exported to overseas markets via the Port of Fremantle.

A nickel sulfate plant is nearing completion and in the final stages of commissioning at the Kwinana Nickel Refinery, which will produce nickel sulfate, a product used in the lithium-ion batteries that power electric vehicles.


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